Daily Market Update
October 20, 2025EUR/USD ranged from the mid to high 1.16’s overnight. EUR/USD remains practically flat on Monday’s early European opening, trading at 1.1665 at the moment of writing. The pair bounced at 1.1650 earlier on the day, favored by a somewhat brighter market mood, but weaker-than-expected German producer inflation data has crippled the pair’s frail upside attempts.
Investors sighed with relief as US President Donald Trump acknowledged on Friday that raising tariffs on China to 100%, as he threatened two weeks ago, is unsustainable. Beyond that, US Treasury Secretary Scott Bessent confirmed that same day that he will meet Chinese Vice Premier He Lifeng this week, which suggests that the world’s two major economies are looking to de-escalate their trade disputes.
In the US, concerns of bad loans at regional banks, which rattled markets late last week, seem to have subsided as quarterly earnings show that credit and revenues among large banks remain solid. This has contributed to improving the market sentiment, adding pressure on the safe-haven US Dollar.
In the Eurozone, German Producer Prices Index (PPI) MoM contracted against expectations for the third consecutive month in September, which is likely to add weight to the Euro. Apart from that, the economic calendar will be thin on Monday in Europe, with the speeches of the European Central Bank (ECB) board members Isabel Schnabel and Joachim Nagel as the only events worth mentioning, while in the US, there will be no relevant releases.
Daily digest market movers: The Euro fails to appreciate despite the brighter market mood
- The improved market sentiment has provided some support to the Euro, as the US Dollar gives away gains, but the pair’s recovery is lacking fundamental drivers, which leaves price action trapped within Friday’s range. The pair seems to be looking for direction, with investors wary of selling the US Dollar, awaiting further news about the US-China trade relationship.
- Economic figures released by Destatis on Monday revealed that the Producer Price Index (PPI) edged 0.1% down in Germany in September, against market expectations of a 0.1% increase. These figures follow declines of 0.5% and 0.1% in August and July, respectively. Year-on-year, the PPI fell 1.7%, following a 2.2% contraction in August.
- Macroeconomic data from China released earlier on Monday revealed that the Gross Domestic Product grew at a 1.1% pace in the third quarter, beating expectations of a 0.8% increase, while industrial production yearly accelerated to 6.5%, and Retail Sales YoY increased 3% in September, both of them beating expectations and showing that the economy remained resilient in the face of higher tariffs from the US. The positive risk sentiment has boosted China proxies AUD and NZD, while weighing on the US Dollar.
EUR/USD hit the target of the Double Bottom pattern at 1.1730 last week and pulled lower. The pair is now testing the broken trendline support at the 1.1650 area, which keeps holding bears for now, although upside attempts remain limited. The 4-hour Relative Strength Index (RSI) is hovering around the 50 level, which shows a lack of clear bias.
A confirmation below the mentioned 1.1650, which is also the area where bulls were capped on October 9 and 15, would put bears in control and increase pressure towards the October 15 low, near 1.1600, and the October 14 low in the area of 1.1545. On the upside, intraday highs are at 1.1675, well below Friday’s high, near 1.1730. An unlikely rally beyond these levels would bring the October 1 high, around 1.1775, back into play.
Source: FX Street
